AEP To Pursue Development Of Transmission Superhighway To Transport Renewable Energy Across The Upper Midwest

COLUMBUS, Ohio, Dec. 2, 2008 – American Electric Power is evaluating the feasibility of building a multi-state, extra-high voltage transmission project across the Upper Midwest to support the development of renewable energy.

AEP proposes building the first 765-kilovolt (kV) extra-high voltage transmission lines to connect major wind developments in the Dakotas and surrounding states to the existing 765-kV network that ends near Chicago. The western terminus of the project would be near a 2,000-megawatt wind generation project in North Dakota being developed by Hartland Wind Farm LLC. Hartland will collaborate with AEP on development of the project.

The proposal is part of AEP’s vision of an expanded national transmission grid to support the development of large-scale renewable generation and more efficiently use existing electricity production and delivery infrastructure.

“A critical component of our nation’s approach to addressing climate change is the ability to harvest our most viable renewable generation resources. The Dakotas, Minnesota and Iowa have some of the very best wind generation resources in the United States, but the wind potential in this region cannot be developed unless we build a very efficient transmission superhighway to bring this clean, renewable generation to population and electricity load centers,” said Michael G. Morris, AEP chairman, president and chief executive officer.

“AEP has taken the initiative to propose a key transmission solution for the Upper Midwest that will support development of this region, including interconnection of renewable generation, and also bring broad reliability and economic benefits,” said Craig Fink, managing member, Hartland Wind Farm LLC. “AEP was the first U.S. utility to harness the value and efficiency of 765-kV extra-high voltage transmission, and it is the only U.S. utility that has built and operated more than a few hundred miles of 765-kV lines. So, it makes sense for AEP to be the one that moves forward with linking our country’s most efficient and reliable transmission lines with our nation’s most viable wind regions. We look forward to supporting them in that effort.”

The transmission proposal is in the conceptual stage, but it is anticipated that linking Upper Midwest wind resources with the existing extra-high voltage transmission infrastructure in the Chicago region will likely require more than 1,000 miles of new extra-high voltage transmission lines at a cost of between $5 billion and $10 billion. Because of the project’s scope and size, it will likely be built in stages over a 10-year period. AEP will collaborate with all appropriate parties within the region, including local utilities. The Midwest Independent System Operator – the entity responsible for the planning and operation of the transmission system in this region – will have final approval of the plan.

“Extending extra-high voltage 765-kV transmission lines into the Upper Midwest will provide significant economic, environmental and reliability benefits, including fostering development by ensuring access to new generation sources. A 765-kV transmission line requires less land to carry more power than lower-voltage lines, and the 765-kV line would cost less than half as much to build on a dollar-per-megawatt basis,” Morris said. “Extra-high voltage 765-kV transmission lines operate more efficiently than lower-voltage lines, reducing the amount of electricity that needs to be generated by reducing line loss – electricity lost during transport. The new 765-kV designs have line losses of less than 1 percent, compared with losses as high as 10 percent for lower-voltage alternatives.”

Hartland Wind Farm LLC is a partnership between Montgomery Power Partners LP and Denali Energy Inc. that is building a 2,000-megawatt wind generation project in North Dakota.

American Electric Power is one of the largest electric utilities in the United States, delivering electricity to more than 5 million customers in 11 states. AEP ranks among the nation’s largest generators of electricity, owning nearly 38,000 megawatts of generating capacity in the U.S. AEP also owns the nation’s largest electricity transmission system, a nearly 39,000-mile network that includes more 765-kilovolt extra-high voltage transmission lines than all other U.S. transmission systems combined. AEP’s transmission system directly or indirectly serves about 10 percent of the electricity demand in the Eastern Interconnection, the interconnected transmission system that covers 38 eastern and central U.S. states and eastern Canada, and approximately 11 percent of the electricity demand in ERCOT, the transmission system that covers much of Texas. AEP’s utility units operate as AEP Ohio, AEP Texas, Appalachian Power (in Virginia and West Virginia), AEP Appalachian Power (in Tennessee), Indiana Michigan Power, Kentucky Power, Public Service Company of Oklahoma, and Southwestern Electric Power Company (in Arkansas, Louisiana and east Texas). AEP’s headquarters are in Columbus, Ohio.